In order to calculate
break-even sales units, fixed costs are divided by the:

Question 3
options:

a)

Contribution margin per
unit.

b)

Contribution margin
percentage.

c)

Target operating
income.

d)

Sales volume.

The margin of safety is
calculated by:

Question 4
options:

a)

Dividing fixed costs plus
target income by the contribution margin.

b)

Subtracting break-even
income from current income.

c)

Subtracting break-even
sales from current sales.

d)

Subtracting fixed costs
from current contribution margin.

A company's most
profitable products are often those which:

Question 5
options:

a)

Have the highest
contribution margin ratios and the highest sales
volumes.

b)

Have the highest
contribution margin ratios and the lowest sales volumes.

c)

Have the lowest
contribution margin ratios and the highest sales
volumes.

d)

Have the lowest
contribution margin ratios and the lowest sales volumes.

The contribution margin
ratio may be expressed as:

Question 6
options:

a)

A percentage of
revenue.

b)

A total dollar amount for
the period.

c)

A contribution margin per
unit.

d)

Total contribution margin
amount.

Variable costs would
include:

Question 7
options:

a)

Rent expense.

b)

Depreciation
expense.

c)

Sales commission
expense.

d)

Executive salaries
expense.

If unit sales prices are
$7 and variable costs are $5 per unit, how many units would have to
be sold to break-even if fixed costs equal $8,000?

Question 8
options:

a)

2,000.

b)

3,000.

c)

4,000.

d)

3,800.

A product sells for $125,
variable costs are $80, and fixed costs are $45,000. If the selling
price can be increased by 20% with a similar increase in variable
costs, how many less units would have to be sold to earn
$300,000?

Question 9
options:

a)

5,595 units.

b)

7,667 units.

c)

1,278 units.

d)

6,389 units.

Millar Company produces a
single product which it sells for $89 a unit. If the fixed costs of
manufacturing and selling the product are $68,400 a month and the
variable costs are $57 a unit, which of the below are
correct?

Question 10
options:

a)

The fixed costs amount to
$32 per unit at any level of output within a relevant volume
range.

b)

The company will break
even with a sales volume of $68,400 a month.

c)

An increase in sales
volume above $68,400 a month will cause an increase in fixed
costs.

d)

The contribution margin
per unit of product is $32.

Accents Associates sells
only one product, with a current selling price of $70 per unit.
Variable costs are 40% of this selling price, and fixed costs are
$12,000 per month. Management has decided to reduce the selling
price to $65 per unit in an effort to increase sales. Assume that
the cost of the product and fixed operating expenses are not
changed by this reduction in selling price.

At the current selling price of $70 per unit, the dollar volume of
sales per month necessary for Accents to break-even is:

Question 11
options:

a)

$12,000.

b)

$20,000.

c)

$30,000.

d)

Some other
amount.

Accents Associates sells
only one product, with a current selling price of $70 per unit.
Variable costs are 40% of this selling price, and fixed costs are
$12,000 per month. Management has decided to reduce the selling
price to $65 per unit in an effort to increase sales. Assume that
the cost of the product and fixed operating expenses are not
changed by this reduction in selling price.

At the reduced selling price of $65 per unit, the contribution
margin ratio is (rounded, if necessary):

Question 12
options:

a)

43.1%.

b)

56.9%.

c)

52.8%.

d)

Some other
percentage.

Grand Gimmicks Company
produces a single product with a current selling price of $170.
Variable costs are $130 per unit, and fixed costs per month average
$6,240. Management is considering increasing the selling price to
$190 per unit. Assume that the cost of the product and monthly
fixed expenses will not change as a result of the proposed increase
in selling price.

At the proposed increased selling price of $190 per unit, what
dollar volume of sales per month is required to break-even?
(Rounded)

Question 13
options:

a)

$19,747.

b)

$10,400.

c)

$9,123.

d)

$18,480.

Grayson Enterprises
manufactures springs and shock absorbers. Springs account for 40%
of the company's total sales revenue, whereas shocks account for
about 60%. The contribution margin ratios for springs and shocks
are 45% and 35%, respectively. Grayson's fixed costs average
$450,000 per month.